Understanding: How much does Medicaid pay for long-term nursing home care?

Medicaid was the primary source of payment for 63% of skilled nursing facility residents in 2024. However, for those concerned with their portion of expenses, the question of exactly how much does Medicaid pay for long-term nursing home care is crucial and often misunderstood.

Quick Summary

Medicaid typically covers the majority of long-term nursing home costs for eligible individuals, but the patient must contribute nearly all their monthly income toward the cost, excluding a small personal needs allowance.

Key Points

• Patient Share of Cost: Eligible Medicaid beneficiaries must contribute almost all of their monthly income to the nursing home, with Medicaid covering the remainder.

• Eligibility Varies by State: Strict income, asset, and medical criteria must be met, and these rules differ significantly depending on the state of residence.

• Exempt vs. Countable Assets: A primary residence and vehicle are often exempt from asset limits, but liquid assets like bank accounts and stocks are usually counted.

• Look-Back Period is Critical: A five-year review of financial transactions is standard, with improper asset transfers resulting in a penalty period of ineligibility.

• Spousal Protections Exist: If one spouse remains at home, they can keep a protected portion of income and assets to avoid financial hardship.

• Not All Facilities Accept Medicaid: While most do, facilities have a limited number of Medicaid beds and must be Medicaid-certified.

• Extensive Services are Covered: Room, board, skilled nursing, medications, and therapy services are typically covered, but luxury items like private rooms are not.

• Spend-Down Programs can Help: Some states have programs that allow individuals with high medical expenses to qualify even if their income is slightly above the limit.

Medicaid's Role in Long-Term Nursing Home Care

Medicaid is a joint federal and state program that provides health coverage to millions of Americans with limited income and resources. When it comes to long-term nursing home care, Medicaid plays a critical role for many seniors who have exhausted other options, such as Medicare or personal savings. While Medicaid can cover 100% of the cost after the beneficiary's required contribution, understanding the state-specific rules and financial structure is essential for proper planning.

The Patient's Share of Cost: The Reality of Payment

For many approved applicants, the misconception is that Medicaid will pay the entire bill with no contribution required from the individual. The reality, however, is that almost all of the beneficiary's monthly income must be paid to the nursing home to help cover expenses. This portion is known as the "patient share of cost," "patient liability," or "co-share".

The calculation for this patient liability is based on the individual's monthly income, with certain deductions allowed before the final amount is determined. These deductions can include:

• Personal Needs Allowance: A small, state-specific monthly stipend for personal items like clothing, toiletries, and other comforts. This amount typically ranges from $30 to $200 per month.
• Medicare and Health Insurance Premiums: Deductions for Medicare premiums and other approved health insurance costs are often permitted.
• Community Spouse Allowance: If the beneficiary is married and their spouse remains in the community, a portion of the institutionalized spouse's income may be allocated to the community spouse to prevent financial hardship.
• Uncovered Medical Expenses: Some past or present medical expenses not covered by Medicaid may be deducted.

After these deductions are made, the remaining income is paid directly to the nursing home. Medicaid then covers the rest of the facility's cost.

Eligibility Requirements for Medicaid Nursing Home Coverage

To qualify for Medicaid to pay for long-term nursing home care, applicants must meet two primary sets of criteria: financial and medical. These rules can vary significantly by state, so contacting the state's Medicaid office is the most reliable way to get specific information.

Financial Eligibility

Medicaid has strict income and asset limits that beneficiaries must meet. Eligibility is based on liquid assets and monthly income.

• Income Limits: As of 2025, income limits for long-term care can vary. For example, some states may use an income cap of $2,901 per month for an individual, while others use different benchmarks based on the Federal Benefit Rate (FBR). Some states have no hard income limit but require beneficiaries to spend down all income except for a small personal allowance.
• Asset Limits: Countable assets typically include bank accounts, stocks, and bonds. The limit is often set around $2,000 for an individual, but this can vary by state. Exempt assets usually include a primary residence (with certain equity limits), one vehicle, personal belongings, and burial funds.
• The Look-Back Period: Medicaid uses a "look-back" period (typically 5 years in most states) to review an applicant's financial transactions. Any assets transferred for less than fair market value during this period can trigger a penalty period of ineligibility.

Medical Eligibility

In addition to financial criteria, an individual must be assessed as needing a "nursing home level of care" (NHLOC). This is a clinical evaluation of an individual's need for assistance with activities of daily living (ADLs), such as bathing, dressing, and eating, as well as cognitive and medical needs. If the assessment determines that a lower level of care is sufficient, Medicaid will not cover the nursing home stay.

What Services Does Medicaid Cover?

For eligible individuals in a Medicaid-certified facility, the program covers a comprehensive list of services. This typically includes:

• Room and board
• Skilled nursing care
• Medically necessary supplies
• Medications (prescription and over-the-counter)
• Rehabilitation services (physical, occupational, speech therapy)
• Medically related social services
• Dietary services
• Emergency dental services

Non-covered expenses usually include private rooms (unless medically necessary), specially prepared food, personal comfort items, and cosmetic services.

Medicaid vs. Private Pay: A Cost Comparison

Understanding the difference between Medicaid and private payment for nursing home care is critical for financial planning. While private pay gives families more choice and potentially better access to certain facilities, Medicaid offers long-term financial security for those who have exhausted their resources. A significant difference is the reimbursement rate; Medicaid pays facilities a lower rate than private payers.

Feature	Medicaid Patient	Private Pay Patient
Cost Coverage	Medicaid covers the cost after the patient's income contribution.	Patient or family pays the full, typically higher, market rate.
Patient Contribution	Patient contributes nearly all monthly income (minus allowances).	Varies based on facility contract.
Room Selection	Typically a shared room, unless private is medically necessary.	Option to choose a private room based on availability and cost.
Eligibility	Requires strict medical and financial qualifications.	No financial qualifications required.
Facility Choice	Limited to Medicaid-certified facilities, which may have fewer designated beds.	Access to all facilities, including those that do not accept Medicaid.
Length of Stay	Unlimited, as long as medical necessity is met.	Unlimited, contingent on payment.

Finding a Medicaid-Certified Nursing Home

Not all nursing homes accept Medicaid. For facilities that do, they must be certified by Medicaid and adhere to federal and state standards for quality and safety. Families can use resources like the federal Medicare Nursing Home Compare tool to find and compare facilities that accept Medicaid. The number of beds designated for Medicaid residents can be limited, so early planning is crucial.

Conclusion

While Medicaid can be a lifeline for covering the exorbitant costs of long-term nursing home care, it is not a program that pays 100% of costs without patient involvement. Beneficiaries must understand the requirement to contribute almost all of their income toward their care, after deductions for certain living expenses and spousal protections. Families must navigate a complex landscape of income limits, asset requirements, and state-specific regulations. By understanding these key aspects, individuals can better prepare for the financial realities of long-term care.

For more detailed information on federal requirements and state programs, visit the official Medicaid website at medicaid.gov.

Frequently Asked Questions

What is the 'patient share of cost' for nursing home care under Medicaid?

The patient share of cost is the amount of the beneficiary's monthly income that they are required to pay directly to the nursing home. Medicaid will then cover the remaining cost. The amount is calculated after deducting a small personal needs allowance, health insurance premiums, and, if applicable, an allowance for a spouse.

What is a Medicaid 'look-back period'?

The look-back period is a standard five-year timeframe during which Medicaid agencies review an applicant's financial transactions. The purpose is to identify any assets that were transferred for less than fair market value, which could result in a penalty period of Medicaid ineligibility.

Can I qualify for Medicaid if I am over the income limit?

Yes, in some states, you may still qualify through a 'medically needy' or 'spend-down' program. These programs allow you to become eligible by 'spending down' your income on medical care until you reach a state-specific income limit. Some states have no hard income limit for nursing home care, but require you to spend down nearly all income on care costs.

How does Medicaid affect a spouse who does not require nursing home care?

Medicaid has spousal protection rules to prevent the community spouse from becoming impoverished. These rules allow the community spouse to keep a specific amount of the couple's assets and, in some cases, a portion of the institutionalized spouse's income.

What happens if a nursing home does not accept Medicaid?

If a nursing home is not Medicaid-certified, it cannot accept Medicaid as a form of payment. An eligible beneficiary residing in a non-certified facility would need to transfer to a Medicaid-certified one to receive coverage, as long as a Medicaid bed is available.

Does Medicaid cover a private room in a nursing home?

Generally, Medicaid does not cover the cost of a private room. Coverage typically applies to a shared room. A private room may only be covered if it is deemed medically necessary for the resident's care, and a doctor's order is often required.

Is there a time limit on how long Medicaid will pay for nursing home care?

No, there is no time limit. For an eligible individual who meets the ongoing medical and financial criteria, Medicaid will cover long-term nursing home care for as long as it is medically necessary. It is an entitlement for those who qualify.